The Somali money-transfer operator Dahabshiil has won a further reprieve after it sought an injunction against Barclays' decision to close its account.

Monday was the deadline for Dahabshiil to leave Barclays, the last big UK bank to hold accounts for cash-transfer businesses. But in the latest twist, the British bank extended the cutoff date to 16 October.

Solicitors for Dahabshiil, one of the biggest remittance companies in Somalia, issued a high court application last week seeking an interim injunction to prevent Barclays from closing the account. The action is based on claims that the British bank is abusing a dominant position by proposing to terminate an existing relationship without "objective justification" and by treating Dahabshiil differently to those with which it continues to bank.

While agreeing to extend the deadline, Barclays criticised the injunction. "We believe this case is baseless, and the hearing has been adjourned to a date when the court can consider the issues fully," a spokesman for the bank said. "Barclays has given Dahabshiil a short extension, during which time we hope it can finalise alternative banking services. Dahabshiil has already opened accounts with a new bank that allows them to make corporate and aid agency remittances to Somalia, but is still in the process of finalising arrangements for individual remittances."

Dahabshiil has not named the potential alternative bank on "commercially sensitive" grounds, but says the institution cannot process cash remittances, which is the mainstay of its business.

In May, Barclays announced its decision to close the accounts of about 250 money-service businesses on the grounds that some of them, including some remittance companies, did not have the necessary systems in place to spot criminal activity with the degree of confidence required by Barclays' regulatory environment.

Its decision followed the imposition of a $1.9bn fine on HSBC last year by the US authorities for inadequate money-laundering controls. HSBC announced last autumn it would exit the money-service sector.

Barclays' decision was criticised by charities and development experts, who claimed the bank's concerns had been exaggerated. Mo Farah, the double Olympic champion, publicly appealed for Barclays to reconsider a decision that many feared would sever a financial lifeline to Somalia, which has no formal banking system after more than two decades of conflict.

Last week, the Department for International Development (DfID) and the Treasury hosted a roundtable to consider the issue. They concluded that remittances were vital for the developing world, but provided no immediate solution to the crisis.

After the latest delay, Abdirashid Duale, chief executive of Dahabshiil, reiterated that the company had complied with regulatory requirements. "The regulations applicable to our business have not changed recently, and we have banked with Barclays for 15 years without them ever raising any concerns," he said. "We are prepared to meet any sensible criteria that the government and the banking sector want to suggest. We therefore fail to see any good reason for closing our accounts while keeping those of some of our competitors open."

Oxfam welcomed the reprieve, but warned it was only a respite. "Three other money-transfer organisations' accounts still face closure by Barclays today, and a two-week extension is unlikely to be enough to find a workable solution," said Ben Phillips, director of campaigns and policy. "Barclays needs to keep all accounts open until a long-term answer is found. The Treasury should show leadership by urgently pushing for a robust solution that ensures ordinary Somalis are not penalised by regulations intended to crack down on illicit financial flows."

About half of the 10 million population of Somalia and the breakaway Republic of Somaliland rely on remittances – worth more than $1bn (£639m) a year – from among the 1.5 million Somalis living overseas. Somalis living in the UK send more than £160m a year to friends and families.

The UK-based Somali Money Services Association (Somsa), which includes Dahabshiil among its members, has put forward a proposal to meet regulatory concerns raised by Barclays and others. Somsa has called on the central bank of Somalia to obtain a commitment from a third party, such as the World Bank or the African Development Bank, to indemnify Barclays for any associated risk.

The central bank would establish a mechanism to oversee reform of cash-transfer operators in the country, including an improvement in compliance systems. Somsa says its proposal has the support of the Somali government and the Intergovernmental Authority on Development.